Labor Market

Labor Market



Employer / Employee Relations

Minimum Wage

Legislation changes in 2015 are set to gradually increase the minimum monthly wage in Israel throughout the years 2016 and 2017. The current minimum monthly wage is 4,825 NIS (approx.1,163 USD) and it is expected to rise to 5,300 NIS (approx.1,325 USD) at December 2017.

Working Hours

The working week begins on Sunday and ends on Thursday or Friday with standard office hours ranging from 08:00-09:00 to 17:00-18:00. A working day is defined as eight hours in places where employees work a 6-day working week, and nine hours where employees work a 5-day working week. Every additional hour to the working day is considered as overtime. Overtime compensation is defined by law as 125% for the first two overtime hours, and 150% for every additional hour.

Retirement Age

The current retirement age in Israel is 67 for men and 62 for women.

Early Notification of Termination of Employment Law

An advance notice is required by law before an employer can terminate a paid employee, with the period of notice determined by the length and type of employment. Monthly employees who have more than one year of employment are entitled to a one month prior notice. Hourly or daily employees have a shorter prior notice period during their first three years on the job. Once they have been more than three years on the job, they are entitled to a one month prior notice as well.

Labor Organizations

There are several labor organizations in Israel, the largest one is “The New Histadrut”, also known as “Histadrut”. The “Histadrut” operates in all areas of employee rights and is one of the most powerful organizations in Israel. It comprises different labor associations from various places of employment such as “The Transportation Workers Union”, “The Engineers and Technicians Union”, “The Social Workers Union” and many more. ​

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Labor Related Costs

​Basic Employee Benefits

Israeli law requires employers to allocate a fixed portion of the employee salary to a pension fund and national insurance. It is the employer’s responsibility to allocate these funds prior to transferring the salary.

Pension Funds

The amount deposited each month to the pension fund comprises two components – a percentage of the employee’s salary (deducted directly by the employer) and a sum paid directly by the employer (calculated as a percentage of the employee salary, but at the employer’s expense). An additional component of pension fund is “severance payment” – an additional sum, calculated as a percentage of the employee salary, deposited monthly by the employer to be paid in case the employment is terminated. As of 2014, the employer has to allocate 6% of the salary to a pension fund and an additional 6% to the “severance payment” component.

National Insurance

National Insurance funds also include two components – a certain percentage is deducted from the employee salary while the other is paid by the employer. For the part of the salary up to 60% of the average salary (5,678 NIS, approx. 1420 USD), the employer is required to pay 3.45% of the salary. For the part of the salary which is over 60% of the average salary and below the maximum income subject to insurance fee (43,240 NIS, approx. 10,810 USD, the employer is obligated to pay 7.50% of the salary.

Annual Vacation Law

Every employee is entitled to annual vacation days by Israeli law. The number of vacation days is determined by the employee’s seniority in the workplace. The minimum amount of annual vacation days is 12 for a 6-day working week and 10 for a 5-day working week. The maximum number of vacation days for a single year is 28.

Sick Leave

Employees are entitled for partial or full salary for missed work days due to sickness. Employees are not entitled to their salary on the first day of illness, but are entitled to 50% of their salary on the second and third day of sickness, and to their full salary from the fourth day of illness onward. Sick leave days vary for monthly-salary employees and for hourly-wage employees. The minimum amount of sick leave days per month is 1.5, and the maximum overall sick leave days in a year cannot exceed 90 days.

Maternity Leave

Pregnant employees are entitled to a maternity leave. The employer is not allowed to employ the worker while she is on her leave. The maternity leave’s length varies for partial or full maternity leaves:
A worker who has accumulated more than 12 months of employment on the same job before the beginning of the maternity leave is entitled to full maternity leave. The worker is entitled to an overall leave of 26 weeks from which she can use 7 before the pregnancy due date.
A worker who hasn’t accumulated more than 12 months of employment on the same job before the beginning of the maternity leave is entitled only to partial maternity leave. In that case the worker is entitled to an overall leave of 14 weeks from which she can use 7 before the pregnancy due date.

Reserve Military Duty

Employees may be required to perform reserve military duties during their period of employment. Reserve military duty cannot be attributed to the employee’s annual leave, and employers are required by law to allow employees to attend such duties.


Additional Employee Benefits

Employees who commute to the workplace are entitled to receive travel allowance in addition to their basic salary. The maximum travel allowance per day is currently 26.4 NIS (approx. 6.6 USD).
For most employees in Israel, once the employee has worked for an employer for over a year, he or she is entitled to recuperation pay. Recuperation pay is calculated by the number of recuperation days the employee is entitled to, multiplied by the recuperation rate as determined by the Ministry of Economy (currently 378 NIS, approx. 95 USD, per day).

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